Tuesday, the Dow fell 38 points. But the real action is in the gold market – the price rose to $908 per ounce. Even the gold miners are finally going up. What does it mean? Is inflation closer than we thought?
The unemployment picture took on an even more ominous tone this week as new layoffs emphatically underscored a worsening global economy. Now, fear is rising that the losses represent a major restructuring in the business world and that some, if not most, of the jobs are gone forever.
Pfizer Buys Wyeth for $68 Billion; Existing Homes Sales Rose 6.5%; McDonald’s Posts 5.8% Sales Growth; Freeport McMoran Lowers Sales Targets; Lincoln National Corp Cutting Staff 5%; GM Cuts More Jobs, Production; Petrobras to Cut Costs by $4 Billion; Halliburton Settles Bribery Investigation
There is a full economic calendar this week, but all eyes will be on the two-day FOMC meeting and the rate decision on Wednesday.
It will be interesting to see how the FOMC approaches this meeting. The current Fed Funds target rate is 0-0.25%, which in and of itself is rather strange. It is a moving target, not a fixed rate. Who determines which rate is used? My guess is this meeting will be used to clarify what the rate is. The Fed will either officially reduce it to 0% in a continued effort to resuscitate the economy, or lock it in at 0.25%. This would at least leave the Fed with one perceived bullet in the gun.
The rest of the…
President Barack Obama’s $825 billion stimulus plan heads to the floor of the House of Representatives this week, with House Minority Leader John A. Boehner, R-Ohio, saying many in his party will vote against the package unless significant changes are made.
Rattner Floated as Car Czar; Sources: Barclays Planning 2,100 Lay Offs; BG Group Pumping Billions into Brazil Oil; Pfizer Cutting 800 Research Posts; Oil Snaps Week-Long Skid; Commercial Banks Borrowing Less Than Investment Banks; Companies Scramble to Fill Pension Plan Gaps
Reading between the lines is key to successful stock market investing today, says Andrew Snyder. Pfizer’s (NYSE:PFE) announcement that it is looking to acquire rival companies in 2009 signals that organic growth will be hard to come by. And that’s bad news for shareholders. Andrew says savvy investors can bet against the company by short selling or buying put options.
New breakthroughs in adult stem cell technology offer staggering implications for medical science, says Patrick Cox. And a massive opportunity for investors. As Big Pharma move in, Patrick says biotech companies involved in stem cell research and RNA technology could become the “investment of a lifetime.”
How will the stock markets respond to a new US president? Martin Delholm says the impact will be less than some people expect. But some sectors will benefit from a regime change. With Obama the clear favourite to win, Martin recommends three clean energy stocks likely to gain from new subsidies.
Investors need a solid defense right now, says Martin Denholm. This means holding high-dividend stocks. Consumer staples and telecoms industries are the best places to cherry pick strong companies. For a lower-risk alternative, try these two high-dividend ETFs (AMEX:SDY, PEY).
